Buffalorising has been redesigned.

With regard to Jesse Schell's stewardship of these buildings: She took on a major challenge in trying to salvage these buildings from the wrecking ball at considerable personal cost. Yes, there was some public money put in the pot (if I remember correctly, the amount was equal to what the city intended to spend on demo). In addition, Jesse spent her own money on such things at structural steel custom made for the building. You are right. The severe winter wind storm at the particular time they were prepping the building for the structural steel blew down the front wall and made a tenuous project all but undoable.

There are some serious challenges with this site. The most limiting is the incredibly small lot size for her piece. It's really small.

According to a conversation with Scot Fisher last week, he thinks they have somewhere around $125,000 to $150,000 tied up to date in the attempt to restore that triangle. He sounds ready to let someone else have at it. Any takers? Anyone willing to make them an offer to take over the project? Put your money where your mouth is; these people did precisely what so many of you advocate: they stood in front of the wrecking ball and tried to save a piece of Buffalo's past. Put up their own money. Anyone believe you can do better? Now's your chance.

As for the properties to the left of Eddie Brady's:

These properties have been owned for a couple decades by an investor with a vision but not faith. They are for sale. Why don't you buy them? We have the listing. Call me if you are serioius. After doing spectacularly good things with the two buildings immediately adjacent to Eddie Brady's decades ago (starting the buildout, combining the buildings, adding a stairwell, etc.) the owner stopped and let them sit. Recently he put more money into them ($25,000 to remanufacture the curved glass for the two story windows up top, for example. Roof repairs, too).

He gutted the corner buildings and installed structural steel. They look a lot better on the inside than outside. The corner buildings offer approximately 10,000 square feet on a floor if combined. It's not a simple buildout, but it's a lot simpler than before this owner purchased them.

Going back to the bar next to Eddie Brady's (former Werner Photographic). This place is absolutely killer on the inside. It would be the coolest bar downtown. I really, really love it. If you, or anyone else you know wants to get into a Chippewa Street development, this is your chance (these structures, as well as forming a welcome sign to commuters exiting the 33 are also situated directly at the end of Chippewa Street--stand at Spot coffee on Delaware at night and look down Chippewa and you will stare straight at the buildings. Bathed in lights at night they would spectacular.

Don't like the current situation?

Buy them and change it. Put your money where your mouth is. They are for sale. Everything around these sad exteriors is changing (thanks Rocco Termini, et al). The area is ripe. Now is the time, bloggers: You can make an investment in an up and coming neighborhood. Anybody game?

This is one of the gateway blocks when approaching downtown Buffalo especially from the 33. It's actually the first piece of downtown that visitors see who arrive downtown from the Buffalo airport. Time is apparently running out for this VERY IMPRESSIVE grouping of old Buffalo buildings. Somebody or a group of somebodys need to rescue this block ASAP. Lots of new development is happening nearby. Lots of new loft apartments have been built and occupied. More lofts are underway. The Washington Market just down the street from the long established flower market of Buffalo is there. The already successful Chip Strip connects to this block. Success is all around this neglected block of impressive buildings. SOS SOS SOS SOS SOS SOS SOS!!!!

Steel...great post, and thanks for bringing this issue to a wider audience.

For a slideshow, housing court information and additional aspects of this story - right here.

The public health and safety issues involving a collapsing building are not being addressed. Simple question. Why? Next question. When?

I would love for that drawing to become reality.

What would be the feasibility of a real estate investment trust that would focus on small-scale projects downtown?

Steel didn't buy these buildings, Ms. Schell did. By taking title to them, they are her responsibility. Steel has as much right as anyone else to criticize her ownership of these properties. While her stepping up to try to save these buildings is laudable, the subsequent state of affairs is disgraceful.

I don't recall whether or not the buildings were gutted prior to or after Ms. Schell acquired them. That being the case, I don't know whether the building was improperly secured during gutting. However, the resulting stewardship has been abominable. As David has pointed out, the buildings are not secure and contribute to the feeling of decay on that high-visibility block.

Clean up the mess...

Ok lets step back a bit here:

First:
Binaz. Thanks for your comment but I think your tone is a bit off into an unproductive direction. I hope that you are not suggesting that I must buy these buildings to have an opinion on their current state. I am not a developer and do not have the resources or skills to take on this project. If you are directing your comment to the community as a whole then I accept your argument. I am also hoping that you are not suggesting that the owners of rotting buildings bare no responsibility for their well being.

Second:
Buffalo Rox, Thanks for the support. However I am not aiming my criticism at Schnell or the owners of any of these buildings directly but more so toward the community as a whole which has allowed this kind of thing to happen here on this block and many more like it. I do not know all of the obstacles and impediments the owners of these buildings may have encountered in their "stewardship" so I reserve my judgment on that issue. However I can think of no reason why the owner of 85 Genesee would allow the site to be left open and unprotected for the last 3 years. I would think that even marginal efforts to secure the site would be reasonable and would make a great deal of difference on this block. Past good deeds do not erase new bad deeds in my mind.

As for what the community can do: Why not follow up on the Queen City Hub Plan and make it a working document. Why not target this block for special attention. Why not assemble these properties using eminent domain and create a package that is workable for a developer. Why not offer a developer a situation where they pay no property taxes at all for up to 10 years for instance. The old ways of allowing a block to rot for 40 years has got to end in Buffalo. Buffalo has gotten too used to this kind of thing to the point that its people no longer look at rotting blocks as something that is not acceptable. This IS not acceptable. The people have to start treating these issues as important issues that need solutions immediately.

After seeing the success of the Granite Works project on Main St., there is no excuse for these buildings to be demolished. Seeing the total lack of progress in rehabbing these buildings with local owners, maybe it'll take an enterprising out-of-towner to get the job done.

Steel and biniszkiewicz,

If one of our less popular developers, say, Carl Paladino, was the neglectful owner of 85 Genesee, Steel would not let him off the hook with this kind of language:

"However I am not aiming my criticism at Schnell or the owners of any of these buildings directly but more so toward the community as a whole which has allowed this kind of thing to happen "

How, exactly, did you expect "the community" to intervene? By using our own time and money to re-board up 85 Genesee when the original board were torn off? By putting on a roof so that Bradley, the homeless "tenant," would be able to sleep out of the elements? By picketing in front of the homes or workplaces of the principals?

The City and Housing Court did indeed intervene, to no avail, and now it appears that "the community," not the owners, will get the bill for the demolition. Maybe we did our job after and do not deserve the blame that you are heaping on us instead of the responsible parties.

But back to my original comparison. Paladino, like Fischer, both have great saves to their name. Carl can take credit for the Ellicott Square building and Scot for Asbury Delaware. Paladino, like Fischer, has more resources than the average Buffalonian to use for their properties. If Carl were the owner, you'd drop the passive voice in a heartbeat.

I really wanted to cut Triangle some slack, too. I've been a Jessie fan ever since I first learned of her plans and ideas. But this corner shows no evidence in labor or materials of $150K in expenditures. Add to that the $45K from the city and we're to believe that Triangle spent $200K here? For that you can get walls and roofs and plumbing and electricity.

But if I am dead wrong, and Triangle really is tapped out because of sinking $150K or $200K (whatever) here, then why do they have the $$ to buy additional properties if they can't afford to rehabilitate the ones they already have? Last fall they bought another property on Linwood as reported in the Buffalo News. When I learned that, I lost a great deal of sympathy for them.

Steel:

I absolutely was directing (venting) at the community, not at you. I apologize that it appeared I was criticizing you. I wasn't. My remarks were made to an amorphous public. Specifically the preservationist public.

To everyone else:

I am a preservationist at heart. I own property in a preservation district and am committed to rehabilitating other properties not in the preservation district but which I believe need to be saved (and coincidentally, which I love and believe will make me rich some day).

I was thrilled with the success of the preservationist rally to stop Cash Cunningham from demolishing the Squire mansion. I found Cash the tenant that now occupies the space (Literacy Volunteers). I am a proponent of preservation.

Just not every single time.

And not just on someone else's dime.

I was disappointed with the preservation coalition when they declined to accept ownership of the Squire Mansion when Cash offered it to them if they would fix it up. That story has a happy ending because Cash bit the bullet and on his own dime really fixed it up and there happened to be a non profit with a forward thinking exec (Tracy Diina) and forward thinking board willing to commit--it should be noted, AFTER Cash began the renovations. But they committed to the neighborhood and it's a great win-win.

I would love for every preservation cause to have such a happy ending. But some are harder than others.

What got me angry was the tone the inquiries into the conditions of the property in question.

I know what a tough piece of real estate Jesse's piece is. It's a tiny triangle (hence the name of the corporation). By contrast, Bill Genrich's pieces, on the other side of Eddie Brady's (which include a parking lot across the street, by the way) are huge. The triangle begins at a point at the corner of genesee and Ellicott and is ridiculously narrow until at least Eddie Brady's. Genrich happens to own the lot behind Jesse and had been, frankly, an impediment to her being able to get at her property to be able to do the work. Quite frankly, Genrich sometimes doesn't play well with others. Maybe it's better he sells his piece.

It wouldn't bother me as much if people were on Genrich's case. Yes, his properties are better secured. Yes, he's put money in recently. Frankly the structural stuff he did on the corner buildings will keep them up indefinitely without much upkeep. He did some very good things.

But he also had a lot more time and more building and more resources to work with.

I remember when Jesse took that project on. I didn't think it was viable and I loved that block. I was trying to get tenants for Genrich's building for a long time by then and was in love with his piece. (In fact I once had the corner building leased, I thought, to a high tech company that was rapidly outgrowing its office on west tupper. Owner was a very forward thinker who believed in Buffalo and wanted exposure to everyone coming off the 33. This was before Rocco began his stuff. Unfortunately during negotiations the NASDAQ crashed and funding for high tech expansions crashed with it.)

But I thought Jesse's piece was hopeless then. It was a noble attempt to save something that looked like it could be fabulous from the facade (and looks massive from Genesee Street) but which in reality was almost like a Hollywood set it was so narrow in parts. She was very brave to commit to the attempt.

I just think the community needs to cut her some slack. It seems she's been busy with a few things lately. They have a newborn (first for both, I believe). I know from personal experience (I have a one and three year old) that takes a lot. and it seems there was something else, . . . what was it?

Oh, that's right, it was The Church. Both Scot and Jesse have worked their tails off for more than half a decade to undertake a massive and spectacular rebuild of a wonderful ruin: the Church on Delaware. People, that just opened up.

I have a long story about that too, but suffice it to say the Methodists (who owned the building prior to selling to another denomination) thought the building needed demolition and was hopeless. They thought Ani, et al, were out of their minds to try to save it.

Unless you want to step in to undertake responsibility for fixing it, be a little less judgemental about what's wrong with it. All I'm saying is that I want the preservationist community to step up the plate, just like the Central Terminal folks have. Volunteer to help when you know how hard the struggle has been. And no, showing up to a meeting to bitch about how someone else isn't fixing something up to your satisfaction does not count necessarily count as volunteerism. I'm thinking more like garbage cans and brooms and plywood and scrwguns type of stuff.

You don't like what's happened at that corner? Well, you know the history, you know the sincerity of the attempt. How about coming to the rescue instead of armchair quarterbacking and piling on. That's all I'm saying.

I'd love there to be knight in shining armour that rescues her project. Perhaps I'm too pessimistic, but I think it's very tough. And I give her a hell of a lot of respect for trying so hard. She did.

Anyone else care to?

Or how about some concensus on what should happen. Does everyone agree to demolition? What are your (public's) solutions?

This block is the direct result of having no accountability in City Hall for decades. Apathetic and ignorant politicians have let (and continue to allow) these once magnificent buildings (among others) to crumble, while their various owners remain relatively unscathed.

While some of the building owners may have done some wonderful things in other parts of Buffalo, their neglectful ownership is inexcusable. There is nothing laudable about taking on a project you on incapable of completing (much less starting). While the various parties obviously do not have the necessary resources, they have not made any public cries or solicitations of those with the means. Instead, while the excuses accumulate, these buildings fade further into oblivion.

Eventually, some, if not all of this block will be demolished under the auspice the buildings are deteriorated beyond repair. Buffalo will then be left with another textbook example of “demolition by neglect.” Of course the politicians will claim they had no other choice, conveniently forgetting their decades of inaction directly caused this block’s death.

On the bright side, you can never have enough parking.

Just Curious,

To the best of my recollection I have had nothing critical to say about Paladino. Also to the best of my knowledge Paladino has no involvement with this building and is irrelevant to the discussion

As for community involvement my comment lays out a community oriented response to this problem. Call your councilmen. Call your mayor, call your state rep. Tell them that you find it unacceptable that the city allows buildings to rot to the point of collapse. Tell them you want a solution which does not invove destruction of valuable historic assets like this. Tell them you want codes strictly enforced. Your elected officials will not move their buts until you light a fire under them.

It just occurred to me I should clarify my meaning of “completing a project.” To me, that means completing a project to its intended point. For example I consider the CTRC’s work a completed project (at this point) in that their primary goal was to seal the main tower from the elements and subsequent further decay.

I give up. Should of read …CRTC’s work a completed project (UP TO this point)

I give up. Should of read …CRTC’s work a completed project (UP TO this point)

Steel,

The City did its job exactly is it is supposed to without prompting from "the community." It gave them $45K to repair the buildings instead of demolishing them. Smart move, and I hope we see more of the same. It gave them several years to show progress. We know these things take time, but work halted, the barricades blew or were pulled down, a homeless guy moved in, and the sidewalk became hazardous, with no response from the owners.

The city cited the owners. It wrote them up for court. It fined them. The city did not "allow" these buildings to collapse, the owners or their contractors did by removing all the horizontal floor joists, which are what hold up brick buildings. That was malpractice and most definitely not "the community's" fault.

But hey, maybe I am missing a real opportunity here. If I get cited for something, I can now blame "the community," too.

biniszkiewicz,
Do you know if Jesse and Scott are interested in a business partnership? I am not interested in purchasing this building out right from them, as the amount invested exceeds the value of the building (whole is lesser than the sum of its parts). I love this building and would be willing to share in their vision if they are interested in a financial partnership.
Where can I contact Scott and Jesse?

Just Curious

You are missing the point. The city allowed them to get to the point of collapse. The city has allowed them to remain in their ciurrent condition for many years. The people have to start speaking out about this kind of thing. The city has to have a plan to stop this situation from developing and sustaining its self who ever the owner or what ever the situation.

L - you mean force the owners to declare bankruptcy and watch the building collapse. Partnership and collaboration would produce a better result.

Simple Suggestion;

STOP THE BULLSHIT AND THROW GENRICH IN JAIL!!!!!!!!

If that happens, everone else will fix their buildings.

Fair enough, Steel. Maybe I am missing the point. So let's imagine a different scenario.

Let's say that the building had been successfully rehabilitated instead of collapsing. Let's say that it was fully rented, and appreciated enough that the owners were able to recoup their investment and then some. Let's say that it spurred additional restoration nearby and turned the whole block around.

Would you then argue that the City or "the community" should get all the credit instead of the owners? After all, in this scenario, the City had the foresight to deliver it into good hands and to start them out with $45K rather than demolishing it.

Funny, how success belongs to the owners but failure is everyone else's fault.

Oh, and biniszkiewicz,

If you have a beef with the Preservation Coalition, you'd better take it up with your client Mr. Fischer, because he was on their board during the Squire House battle and still is.

About Central Terminal: The reason that the Central Terminal Restoration Corporation is doing good work is because Preservation Coalition board member Scott Field personally took title to Central Terminal and after the Preservation Coalition created the CTRC, Scott transferred the title to CTRC and served on its board.

Inquiring Minds:

Reach Scot Fisher @ Righteous Babe, (edited ****** Phone number deleted*****) . I can't speak for him on this property; I'm speaking as a guy who's curious about what happens. But my guess is that at this property they'd listen.

Just Curious:

I'm one of the few people in Buffalo, it seems, who likes Carl Paladino. Not like he's been easy to work with always. But he's done good things, overall, in the city. I am happy for his record. He is his own worst enemy with his temper, but he's done some very positive things.

But yes I would come down on him harder. Reason: he has deep, deep pockets. Jesse is a rookie.

As to criticizing them for buying other properties when they couldn't do this one. I'm not aware of anything else they own save for a residential rental and 1542 Main Street. The rental has income and that is how it is possible to buy that while trying to do this. This building has no income; only outgo. As for 1542 Main, Scot bought that long before he and Jesse were married. She bought the triangle before they were married. Both anticipated the Church being done long, long before it was. I remind you, the Church just opened, thanks in very large part to them. Not as developers profiting from big ticket tenants. But as Buffalonians trying desperately to do good.

With regard to 1542 Main I have history and comments to offer if that should become another discussion. But that building is also a labor of love that attention was delayed from due to the Church. Which is now done, thank the heavens and LISC and everyone else (Ani, City Hall, foundations, whoever you were).

Apollo and L:

If this building does come down, it was demolition by neglect long before Jesse ever got involved. She saved it previously from the wrecking ball so if it goes there and we lose the facade, it's something we would have lost anyway.

And if you wish to take a hard line on this (I heard the comment: they had their time; why did they undertake an impossible project?). Maybe she bit off more than could be done. Maybe it could have been done if the weather had not conspired so and the facade had not been lost. Maybe it still can be done and now that the Church is done perhaps it will be again attempted. I don't know. I do know my impression was they would get out if someone wants to have at it.

As to what they spent, I am simply reporting what I heard. I don't know the breakdown. Perhaps you could ask them.

overall:

If we treat every owner like a criminal, no one will bother to own. No one will try. That is not a good route.

In the ham and eggs breakfast of real estate, tenants are the chickens and owners are the pigs. The chicken is involved in the breakfast. The pig is committed. You want to save this city? Buy something and work it. Get off your duff and DO something other than bitch.

Binaz...oh thats the guy who owns a house on johnson park and hasn't finished the rehab for over 15 years, 605 fillmore, and four other buildings on main st all in bad shape and he is one to talk? next time don't give so many clues as to who you are.

it is not a blame game guys it is an action game. As citizens you have the power to take the power. get your elected officials interested in making this block whole again!

watch u're step:

I thought using my real name was a good clue as to who I was.

Yes I own 605 Fillmore Avenue at the corner of Paderewski (near the Terminal). Have since 1987 (April 13, to be exact). First property I ever bought. Built by my father's uncle, a doctor, who practised there and raised his family. What gives you the impression it is in bad shape? It is the finest property on Fillmore. Brick, slate roof, original Otis elevator I put $50,000+ into renovations five years ago for the current tenant (a responsible non profit). Renovations included radiant heat. The place has spectacular oak paneling, wonderful plaster ceilings and incredible stained glass windows. I lived there a long time. What's your problem with a property that is so nice in a neighborhood that isn't.

As for Main Street, yes I own Sherwin Williams. They've been there since 1987. I just bought it a couple years ago. I don't think that's in bad shape. I am 50% owner of the AdArt building (next to Willoughby's). The tenant in there has for decades. I don't think that's in bad shape. My partner and I just bought it, so I can't say I've improved it yet. We intend to. I do own the southwest corner of Main and Ferry (El Waseem's, whose tenancy predated my ownership). It is much, much improved from when I bought it at county tax auction a few years ago. It has a long way to go, but it is coming together. Sorry it's not fast enought for your taste. What is it that you said you owned?

I just sold an apartment buidling on Allen Street (84 Mariner, or 214 Allen, southwest corner Allen and Mariner, across Allen from the Old Pink). I did a hellova lot of renovations on that before I sold it (took it from half empty section 8 housing to fully occupied, upscale units: all new kitchens, baths, roofs, boilers, paint, hallways, floorplans, etc. I owned it for a half dozen years and made that gem shine. Do you like the paint scheme I developed (greens and terra cotta). I sold it invest more of my eggs on Main Street. I really, really believe in Main. I'm putting my money where my mouth is.

As for the rooming house on Johnson Park, yes I own it and love it and am working on it. I did live there (while it was a rooming house) for over a dozen years. A few years ago, I kicked everybody out and started the gut rehab it absolutely requires. I'm plugging away. Yes it is expensive and frustrating and rewarding. It's all outgo at this property, no income. But I'm working it. I'm sorry. I didn't catch the addresses that you have committed to in the form of ownership. What was it again that you said you own?

Binaz,

I do very much like the Mariner St. color scheme it is very sophisticated and unexpected too. Good work on that one!

Thank you.

binaz, shouldn't you be out shilling some building instead of trying to market your "expertise" on this blog?

You're right. I should be directing my energies to where they will actually do some good. Didn't mean to be a blog hog. Sorry.

Bob - I appreciate your comments and learn a little more about the property game and the city every time you post. Please continue to share your real estate knowledge with the readers of BRO, you are one of a handful of readers who will carry on a rational discussion and embrace a contrarian viewpoint.

I read your post about how Jesse and Scott Fisher may be over their heads with the triangle project, and it frightens me. My husband has expressed a lot of interest in purchasing a place near downtown that would help to preserve the urban fabric; however I am frightened by the prospect of a 'money pit'. Do the majority of rehabbers lose money on their investments? Do they have to sink more cash into the property than they would ever be able to recoup when sold?

Someone told me that The Church project was so far over budget that the materials used exceeded the value of the church. Is that true? Should I just consider this charity to the city and an investment in the future of the city?

Keep posting, I look forward to learning more through your words.

Eileen: Thank you very kindly.

Everyone: I don't want to hijack a site on Jesse's property (anymore than I already have). But I want to answer Eileen. Skip to the next commentator if I bore you, please. And to those in the preservation community I've expressed anger with in this and other articles, I was a little off at times and I know that. I've seen several articles on blogs lately about this property (Triangle) and it just got me going. Also, I've never had an opportunity to address the preservation community before, so you get some pent up stuff. We will get along (I think) down the road.

But as for Eileen's questions:

I do hope you invest downtown. My understanding is the Church was way over budget. My understanding is that many sources helped meet the ever expanding need, not least being a few million dollars of Ani DeFranco's money that she never expects to recoup. That project was a real labor of love.

Don't invest in a project that big.

It's hard to make money on investments in general in the short run. Real estate is that way, usually. Rehabs can be expensive, especially if you must hire out for everything. But they can also be smart.

A recent project that I love was undertaken by the former neighbors to my Mariner building: they built the small new construction charmer on the corner of Bryant and Ashland. They did that very cost effectively and it does a lot, I think, to add to the fabric of the neighborhood. I don't know what others think. That kind of project would make an easy rental that I think would pay for itself. There are opportunities to rethread torn fabric in a number of neighborhoods.

As for where to look for an investment that will do good, look for a neighborhood near where a lot is happening to tag onto that and also to stretch the frontier. But know that it will take a long time for the frontier to become solid.

Old houses can be great investments or big moneypits. It's hard to generalize. In general I think doubles are a lot of work for the payback. But I guess I don't have enough info. to make any good recommendations. I should mention that I'm pretty ignorant about residential real estate. I never did residential. In general though, my impression is that you have to get lucky or be able to perform work yourself to make money flipping property successful (not that you suggested flipping and not flipping in a derogatory sense. I only mean what you get back when you sell).

That said people do it and make money and make nice spaces out of ones that were nasty. Someone contacted my about the Johnson Park property recently and I met him and his wife. They just moved here from Baltimore and were shopping downtown for a down and out property to rehab. In a short time (few years, I think) they rehabbed and sold three propeties in Baltimore. But his wife pretty much made that her job. Buy a property, do a great rehab, sell it.

There are lots of places to salvage pieces of the urban fabric. Commercial buildings are also great threads in the urban fabric.

Apartment buildings used to be good to invest in. Right now I'm not sure. The last few years have seen prices really spike as more out of town investors come to Buffalo. When I sold Mariner I could not believe the interest from out of town investors. Compared to the coasts, prices here rock. I had buyers from NYC (about a dozen) California (three, including the one who bought it), Arizona, Washington (the state) and elsewhere. On the coasts people can't afford to buy a house and here they can buy a building. One of the groups I met was three investors (friends who work together) who live in Palo Alto. They can't buy a rundown four unit in a bad neighborhood not very near them for less than $1 million, so they bought a coupe of four units in Depew and hired a local management company. I saw a lot of amateurs looking. One guy from LA was a screen writer (just moved there from Jersey). It didn't make financial sense to buy in LA and his income was feast or famine so every time he sold a script he would buy an apartment building in a reasonably priced city. He owned in Baltimore and Rochester. I wouldn't consider him an amateur. But there were a lot of amateurs out there. And that concerns me.

I'm concerned that it is very hard to manage properties from out of sate and that with high sale prices come high taxes. I'll give you an example. I sold another apartment building I owned a few years ago. The opportunity came to sell my building and I decided to trade it for the Sherwin Williams building (plus some extra). I sold it for about $400,000 a few years ago which was quadruple my assessment. (I had bought it very cheap and put good money into it). As a result of my purchase price, I got the assessment reduced to $100,000. When I sold it for $395,000 I figured the new owner would pay four times the taxes, as the assessment would rise. I figured the higher taxes into my price, so the place would still make sense for the new owner.

But that's not actually the right way to do it when presenting property. Don't presume, as seller, what the taxes might be. Just go on your actual reality. In this case, the buyer of my place got lucky. The city never changed his assessment. Instead of his taxes quadrupling, they stayed low (Buffalo's rate is roughly $4,600 tax per $100,000 of assessed value, I think, for commercial) So the buyer was lucky.

Then just recently, two and a half years after he bought it from me, that buyer sold the building to a REIT from California. He sold it for $870,000. Maybe I sold too cheap. But $870,000 is crazy. Absolutely nuts, I think. But in the eyes of this California REIT, that number for a 23 unit building probably looks way cheap.

But now think about the taxes. Now, City Hall has an assessor who specializes in apartment buildings. Let's say this building gets reassessed at the new sale price. All of a sudden, taxes on the building are going to rise from less than $5,000 a year (which, admittedly, was cheap, but it was a bad neighborhood when I bought it) to about $40,000 a year.

I owned that builidng. I don't see any way possible for that building to turn a profit while trying to pay $40,000 per year just in taxes. I am far from the most sophisticated investor out there. There are many, many, many more with a lot more property and expertise than me. Maybe I'm wrong, but I see that building being lost to forclosure (mortgage) in a few years. Maybe I'm totally under appreciating the value of the property and maybe I operated it relatively poorly. Maybe these new owners will really teach me a lesson. I don't know.

But I'm afraid some apartments buildings are selling for more than they can support. I think money pouring in from outside may result, in a few years, in a drop in prices as new investors decide the payback is lower than it looked like it should be, or as properties are lost to the banks, etc.

Also, there are more apartments being built, but Buffalo isn't growing. So to some extent it is a game of musical chairs. To attract tenants against product like that being produced downtown you will have to compete on price or quality. As more vacancy plagues older properties, those landlords will be compelled to compete on price, pinching margins. Vacancy is your worst enemy in rental.

But on the other hand, if buyers hold on for long enough, inflation will cure that.

Anyway, apartment building prices scare me right now, but I am a very conservative guy on prices and I may be totally, totally wrong.

Happy to talk at length (obviously), but I'm going to turn in. It's late. I like other commercial stuff. I also like apartments some places (despite what I said, I intend to create new apartments in places I own on Main. I think I have unique product to offer. I am very optimistic about what I want to bring to market, but it's going to hurt some landlord somewhere when I take those tenants.)

What kind of place were you considering? Send me an email at Pyramid and we can talk privately so I won't hog this blog.

Speaking of REITs, any feasibility in getting one started to invest in downtown? If a thousand people invest a grand each, that million might be enough to invest in a small building. Maybe there's enough left over after property purchase to create a storefront and a couple of condos above?

Bob - Thank you for another informative post! I insisted that my husband read this thoroughly and asked him to email you this week to talk about his plans. He has looked at a few buildings and has "big plans" and "vision" for a few of them. My role is to worry about our life savings being depleted, winding up in housing court, or making the front page of the Buffalo News for a collapsing building that is beyond our control to repair.

Enough worrying though, it is good to know that there are people like you and many other people on this board who are willing to lend a hand, ear or thought when asked. This is what differentiates Buffalo from many other cities; the passion, the warmth and the compassion of fellow citizens. This is why I insisted that we raise our family in Buffalo, and why we moved back.

Thanks again, you are a true gentleman and I appreciate your help. I hope my husband connects with you sometime soon!

Thanks to Steel, WestCoast Perspective, Gabe and others who write and post regularly. Your insight and actions are greatly appreciated by so many who do not post here regularly. My friends and I talk about BRO more than we talk about issues on CNN, Channel 4 or the Buffalo News.

Daveydoo:

I don't know the technical and legal challenges to forming a REIT but I agree it is a very attractive vehicle in which to do good but also in which to limit one's financial exposure. I like the idea a lot and think it would be very attractive to many Buffalonians whose heart is in the right place but feel investiment is far beyond them.

I would particularly like a REIT which is a subsidiary of or somehow related to the preservation community, as the community then might possess the vehicle to acquire and turn around cherrished properties.

One property I have fantasized about forming a REIT to acquire and turn around is a very large project: the old Pierce Arrow plant on Great Arrow. Acquisition cost (it is currently still under contract, I think, to someone who I don't think is going to buy it; I think it will be back on the market soon) is expected to be about $4.4 million or thereabouts. It encompasses approximately 1 million square feet and has income (reportedly about $350,000/yr. after expenses, less mortgage). Even if half the buildings were demolished (some are in poor shape and are completely vacant, more greenspace might be desired, etc.) the purchase price would be less than $10/square foot.

If 2,200 people put up $2,000 each, we could buy the complex. It has income; it could pay for some consistent improvements while a master plan was developed and could be an awesome project when done (I was thinking mixed use residential and big floorplate offices. It would require huge investment to make it happen, but the location is great--Delaware/Elmwood/Delaware Park/Lincoln Parkway). I even thought of a marketing angle a while back: Buy A Piece of Buffalo: a ton of people (meaning 2,000) put a ton of money ($2,000) into Buffalo history.

A much smaller, less profitable (undoubtedly) and less ambitious project would be to acquire a down and out building like St. Vincents. MMany on this blog and others talk about the German Orphanage on DDodge--same deal there.

I like the idea a lot.

Biniszkiewicz,

Between folks residing in the area and ex-pats like myself, it doesn't sound too far fetched that that kind of money could be raised.
I wonder how receptive the financial community would be to financing such a project. It sounds like the Pierce Arrow idea has good fundamentals. I just wonder how many banks would have to be visited before someone says "Yes."

The good thing about such a REIT is that if we did get a couple thousand people putting up a couple thousand bucks, no bank is involved at all in acquisition. Then for the rehab, we've got 100% equity in the existing buildings, making financing much easier.

EILEEN MURPHY,IF YOU ARE TRULY AN AMATEUR AS YOU SAY IN REALESTATE...why not try purchasing a couple of 2 family homes in Buffalo. There are still great neighborhoods left in BUFFALO. RIVERSIDE, BLACKROCK AND NORTH BUFFALO have plenty of decent houses that offer some vey good rental income with an affordable sale price. This ratio would allow a positive cash flow that would support maintaining the property in good condition and at the same time build some equity. good luck!

Hi Joe,
I would love to take a more cautious approach, and this was my recommendation to my husband. He is really interested in "going big" as he calls it.
I agree with the duplex idea, in fact I looked at one a couple weeks ago. My plan would be to build slowly off a few duplexes or single-family rentals in places that are right near the edge of current development or projects. Like near Roswell Park and the medical campus. Build cash flow, then look to "go big"; he is more aggressive and takes more risks than I do.
I will forward your post to him as well. Thanks for the feedback and sense of reason!

Bob B, I like what youre saying here and I remember you talking about Main more than 2 years ago when you showed my father and I the old Cloister on Delaware. Keep doing what youre doing, sounds like you are truly invested and committed...like the pig...to what youre doing.

JP: Thanks. Still in Vegas?

Eileen: I was a little dismissive of the double idea for this reason: When you get beyond a few of them, they tend to be a pain. All the people I knew of who had 25 or 50 doubles got into a mess. But then again I don't know many. But I remember some high profile people who got into a jam in court for their properties, mostly because they had too many. Maybe there are groups running them well, but usually by the time someone has six or seven doubles they're thinking it would be easier and better to have everybody under one roof. And six or seven is a big number for a lot of people.

But I do like doubles in a couple regards, and to be honest, even with my commercial properties I am willing to buy a couple doubles in my neighborhood. I live on a modest street with lots of doubles (ours is a nice single, but it's one of the few). So I want to control my neighborhood. But beyond that I want to do it as investments for college. Here's my suggestion to anyone out there thinking about college educational expense: buy a double when she's pregnant, each time she's pregnant. That double will pay for college when he/she is 18.

Buy a double for, say $80k-$100k or so. It will cost you about $7k-$10k to get into it. That property is worth whatever it is in today's dollars. How much college would that pay for today? Probably it will pay for a similar amount when you sell. And when you sell, you won't owe a dime, except to capital gains taxes. Save some rent during the last three years (after the mortgage is paid) to help pay the cap gains tax. Take out a fifteen year mortgage, so it's paid off a few years before Johnny or Jane are going to college.

You won't get rich. It's not going to be a homerun financially. It's a good single or double, though. If you could invest $10k today to pay for all of college tomorrow, it's a pretty cheap way to do it.

Maybe you don't even sell it when they're in college. Maybe you just refinance it then, take out equity and pay no cap gains tax. Then, after Junior is done with school, give him a start in life by transfering ownership of the property to him (mortgage and all; he'll owe money but will have income to more than offset it. Also, he can sell if he likes, it's his property, and come out with cash if he wants). Free college tuition and a cash bonus for graduation. All for $10k when you know you've got one in the oven. What do you think? We could market this to a lot of Clarence and E. Amherst residents who otherwise wouldn't dream of owning a double in Buffalo. If owners only owned a double or two or three, they wouldn't get out of control.

Daveydoo and anyone else still listening:

Another angle of the REIT is that there could be lots of incarnations of it. There could be REITs set up for a single block. Get 10 or 20 investors to adopt a block. Buy all the houses that make sense, do sensible improvements, control the environment and stimulate more investment.

Oil and Vinegar is probably not listening now but I was irritated at his/her tone about putting businesses where we want them to go instead of where they want to be in another post. Because I was irritated, I was dismissive of Connecticut and Niagara Streets, along with her/his suggestion of east side lots.

But I do like Niagara and Connecticut for investmetnt and pioneering. and overall, we, as a city, must extend the frontiers of the Delaware District beyond Linwood on the east and Richmond on the west. We need strategic investement to grow the good neighborhood. That's one reason I am so bullish on Main: we, as a city, Must improve Main. And if we do, it will be great. I can see the day, 10 years from now, that a Clarence resident could drive downtown and home again to Clarence Hollow taking Main Street the whole way and not being afraid, but instead marveling at how Buffalo has come back. It's now down to short stretches that need a turnaround and it will happen.

Eileen:

Forgot to mention: I have a property that you and your husband might both love. It's bigger than a double: it's a mixed use residential and commercial, it's got a fabulous location downtown, big upside, high profile and makes financial sense. Call me.

Biniszkiewicz,

Seems like that kind of REIT would be great for the blocks on the Lower East Side between the Central Terminal and areas outside of downtown. The Larkin article recently posted seems to indicate that area is advancing. Perhaps some starter homes for young professionals out of college would be appropriate at first.
It seems that a group of investors wouldn't necessarily have to do the rebuilding and rehabbing if a private school was constructed. I was always curious as to why developers - even in the big cities - never thought to do something like dedicate the first three floors of a condo tower and set up a school. Financially it's an obvious loser, but a good school would shoot their property values way up. Do that in a marginal part of the city and I would think that area would be hot within a relatively short period of time. The Pierce Arrow idea you were talking about sounds like it has plenty of space. Certainly though that area doesn't need a school nearly as badly as the East Side.

That's a very interesting idea. There are no more charters available for NYS (100 allowed by Albany have been filled, though more might be legislated next year or so).

It's funny you mention school for Great Arrow. I actually showed it to a private company which has a subcontract from the Buffalo Public School system. And instead of Great Arrow, they chose 998 Broadway (K-Mart, formerly the Sattler's site). It's under contract, awaiting Albany funding and local approval (the school is operating this year in an older school building, but due to the type of facility they want, the K-Mart will convert much better.

Biniszkiewicz ,

You wrote, "As for the properties to the left of Eddie Brady's: These properties have been owned for a couple decades by an investor with a vision but not faith. They are for sale. Why don't you buy them? We have the listing. Call me if you are serioius."

I saw above that you mentioned that the Werner building was your listing. I called the phone number on the building almost everyday for two weeks last month and nobody would call me back about the building. Is it for sale or not? No wonder the buildings are sitting idle. Please contact me. I am going to buy something before the end of the year. I even asked agents that I have been working with to try and contact the seller and they told me not to bother. Word is, the seller is non-responsive. What gives?? I asked an agent to write you a letter about my interest in the property. I noticed that the sign is down this week. Is the property still on the market? Please contact me at Bloviate@BuffaloBloviator.com